Campbell on Key’s sell out

Written By: - Date published: 3:39 pm, October 28th, 2010 - 18 comments
Categories: business, film, john key, Media - Tags: , ,

During the whole sorry Hobbit saga two commentators stood out well clear of the pack for the depth of their coverage and the accuracy of their insight. Those commentators were our own Irish Bill, and Scoop’s Gordon Campbell. As the dust settles today Campbell has written a long piece on the settlement and its implications. The whole thing is well worth a read, but here are some key points:

At the very least, that’s an extra $US25 million sweetener for Warners. Our employment laws for film industry workers will also be changed. It means that John Key has done what he said two days ago New Zealand couldn’t afford to do – match the 20% subsidies being offered by countries like France and Hungary, Earlier this week, Key said we could offer Warners some more money, but couldn’t match the offers being made by other countries:

Mr Key said Warner executives had raised the disparity in tax rebates in different countries; New Zealand’s rebate is 15 per cent on domestic spending, less than countries such as France and Hungary (20 per cent) and Ireland (up to 28 per cent).

“That is large and we can’t match that,” Mr Key said. “What I can’t rule out is [that] we won’t look at some things at the margins that might make the deal slightly better.”

Yet matching the bids by some of those countries is exactly what he’s done. At 15% the basic subsidy on the $US500 million budget for The Hobbit stands theoretically at least, to be $US75 million. Add in that extra $US25 million and you get a total of $US100 million – which is the headline rate you’d get from the 20% subsidy on offer in France or Hungary. Except in addition, we’re also offering (a) to change our employment law and (b) to offer greater flexibility about the qualifying criteria for the LBSPGS – though the detail of those criteria changes can’t be revealed for ‘reasons of commercial sensitivity’ lest others, presumably, press for similar treatment.

Key said that we couldn’t match the tax deals offered by other countries, but according to Campbell’s calculations that’s exactly what we have done. Campbell also has harsh words to say about Key’s “skill” as a negotiator:

For an allegedly hard-nosed former merchant banker, Key also seems to have been remarkably inept as a negotiator – having given away his intentions (yes, we’ll change the employment law, yes, we’ll give you more money) even before he entered the bargaining room. There seems to have been no attempt to call Warners’ bluff and use the one factor – time – where we actually had Warners over a barrel. …

It was always going to be hard enough meeting the tight schedule in optimal conditions out of Miramar, let alone adding foreign locations, foreign crews, and foreign trade unions into the mix. In these circumstances we had no reason to cave into Warners – and getting an ad about New Zealand as a location onto the eventual DVD is a laughable trade-off. Key’s basic negotiating stance seems to have been: I’m willing to jump, but don’t ask me to jump too high, please. What a tiger.

Leaving aside the sale of our sovereignty, even the poor agreement reached by Key is good news in purely economic terms:

In the end.. even this crappy deal was still value for money, I’d argue. Key does appear to have bargained like a two-week old kitten, but the stakes involved will still mean we come out ahead.

Campbell goes on to make a compelling case for using this opportunity to strengthen the film industry in NZ much more broadly and robustly than we did after LOTR. We need to move away from reliance on occasional (and temperamental) “superstars” like Peter Jackson, and towards a broader based industry that is more genuinely committed to New Zealand and its workers.

For Campbell’s full, detailed, and thoughtful take on all this, go read his original article here.

18 comments on “Campbell on Key’s sell out”

  1. Draco T Bastard 1

    We need to move away from reliance on occasional (and temperamental) “superstars” like Peter Jackson, and towards a broader based industry that is more genuinely committed to New Zealand and its workers.

    If we’re going to do that then we’re talking about doing the whole lot “inhouse” as it were which would mean full government funding rather than hoping for a large foreign conglomerate to come over and shaft us again. I think this would be the best option as it develops local talent far more than kissing arse to the likes of Warner Bros.

  2. SHG 2

    We need to move away from reliance on occasional (and temperamental) “superstars” like Peter Jackson, and towards a broader based industry that is more genuinely committed to New Zealand and its workers

    What is a “broader based industry”?

    • Bright Red 2.1

      essentially, the film industry is a monopoly, right? Remember when you were wetting yourself because the film industry would collapse if weta didn’t get this one film? the film industry is weta – that means it’s a monopoly, and any monopoly can exercise its market power to win super-profits, in theis case by holding a gun to the head of the government.

      a broad based industry doesn’t have private monopolies.

      • SHG 2.1.1

        Saying you want “a broader based industry” is useless. It’s like saying “I want equality!” It means nothing without explanation.

        • r0b 2.1.1.1

          It’s pretty clearly explained in Campbell’s article SHG. Let me take a wild guess – you didn’t bother to read it.

          • lprent 2.1.1.1.1

            I think that you were right. By the looks of his comments over the last few days the shagger only reiterates what his navel fluff tells him is important. I think he is locked into the 2007 troll mode – repeat your line over and over again. Ignore what anyone else says. Never actually debate with anyone els because it might show up your ignorance.

            But he hasn’t tripped my troll moderator yet. He is just rather boring. As soon as you see his handle on a comment you can predict what he is going to say…

        • bbfloyd 2.1.1.2

          SHG.. neither does wasting our time with playing dumb just so that you can satisfy whatever strange compulsions you are afflicted with… in fact, your arguments mean less than nothing…

    • Carol 2.2

      I think Campbell points in the direction of using Weta’s technological expertise in areas of gaming.

      But I also think, for the industry to be viable in NZ, it needs on-going projects for all film workers. TV productions tend to have a longer life than movies, and the discussion has tended to focus on Jackson and Weta, and ignored Auckland’s history of productions. This includes international TV productions like Hercules and Xena, and other ones since, like Power Rangers, Legend of the Seeker and Spartacus. This has led to the development of various studios and facilities around Auckland, including the current Henderson Studios that is leased out for local and international work regularly.

      I don’t think we should aim to become very dependent on Hollywood corporates. Having some surety of work, enables the skill base and resources to be maintained. Some of our local productions for film and TV have contributed to this: first Shortlland Street and later Outrageous Fortune.

      There is a lot to be gained by sharing skills, expertise, and resources with a range of other countries, to add some support to the NZ base, and this can be done in a way to give Kiwis more control than with many of the US corporates: eg as I understand it, there can be a range of agreements from 20%-80% to 50-50% in terms of inputs & outcomes.
      NZ also has done a range of co-productions, and has been developing a range of international bi-lateral agreements: I saw online there was a co-production agreement with France written back in 87.

      Key signed a co-production agreement with China back in July:

      http://www.beehive.govt.nz/release/film+co-production+agreement+signed+china

      There has been work done during the last 3 years on developing connections with South Korea. South Korea have thriving movie, TV and IT industries – they are a rising centre of innovation in the area:

      http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10681057

      5:30 AM Sunday Oct 17, 2010
      The Auckland film industry hopes its three-year effort to build relations with South Korea will lead to a lucrative new co-production market.

      Industry body Film Auckland has signed a memorandum of understanding with its equivalent body in the city of Pusan.

      The agreement was signed this week at the annual Pusan International Film Festival, one of the largest film festivals in Asia.

      The link-up with Pusan is part of work Film Auckland has been doing since 2007 to create opportunities for joint New Zealand/Korean productions.

      The South Korean and New Zealand governments signed a co-production treaty in 2008 and, since then, there had been numerous exchanges of film industry delegations between the two countries, said Film Auckland executive manager Michael Brook.

      “The groundwork’s definitely set,” Brook said.

      While there hadn’t been any co-productions yet, various projects were in development, he said.

      The Auckland film industry had some great North American clients but “to get some really good growth we need new markets”.

      ….
      Next year, for the first time, Auckland will host the annual Asia-Pacific Producers Network, a gathering aimed at developing co-productions.

      This article also says that under the co-production agreement with China, that would enable China-NZ co-productions to be shown in China. China strongly restricts the number of foreign films shown in China.

      • clandestino 2.2.1

        The only way we are going to get a ‘broader based’ film industry is if we, the consumers, start paying for stuff. We don’t, we won’t, and we never will, so it’s a non starter. Ever wondered why Sky (Prime) often makes good NZ docos etc, while the rest wallow in filthy foreign seconds?

        • Colonial Viper 2.2.1.1

          if we, the consumers, start paying for stuff. We don’t, we won’t, and we never will,

          What clandestino, are you suddenly spokesperson for all global consumers now? Or are you just speaking BS?

          • clandestino 2.2.1.1.1

            No, I’m just saying if the demand was there it’d get made. I honestly hope we make some NZ stories coz we’ve got plenty but it seems obvious no one’s fronting up with the capital perhaps because it won’t make even as many don’t want to pay.

            • Colonial Viper 2.2.1.1.1.1

              This is the old problem of people continually diverting billions of capital into tax sheltered property speculation and property development. Keeps a few builders occupied but no new industries get built.

  3. ghostwhowalksnz 3

    The reason why France could offer 20% rebate is that matches the GST ( VAT) rate
    Likewise Hungary has a GST rate of 25%.
    Ireland has a 21% rate.

    The rebates are essentially to return the GST back to the company. This matches what would happen if an ordinary product was sold overseas.
    For a film the the negative is ‘made elsewhere’ and is the final product .

    • Lanthanide 3.1

      Is there something different to way the GST is handled in the film industry in NZ?

      I mean, isn’t it only the end-user that pays GST. Company A digs up some iron and sells it to company B at $10 + $1.50 GST. Company B claims a refund from the government of $1.50, does some processing and sells the iron to Company C for $20 + $3 GST. Company C claims $3 from the government as a GST refund and sell the final product to Consumer Z for $30 + $4.50 GST. The way it boils down is only the final consumer Z has paid GST, because company B and C claimed refunds from the government.

      How are movie studios paying GST in NZ?

      • ghostwhowalksnz 3.1.1

        Contractors !!!

        When you are a contactor you invoice for your services . Which includes GST

        This would also include equipment hire , making sets, location rentals …. the whole gamut.

        • Colonial Viper 3.1.1.1

          There is no way that the film companies end up paying GST here in NZ anyway. They get all their GST refunded with every GST tax return. Only end consumers end up paying GST.

        • Lanthanide 3.1.1.2

          The contractor collects the GST and returns it to the government.

          Meanwhile, the film company files a GST return to the government saying “we paid xx GST while running our business” and the government refunds it back to them.

          This is no different than Company B to Company C in my example above, except instead of products made from iron, we’re dealing with creative services from a contractor. It’s treated exactly the same for tax purposes – the S part of GST is “services”.

          The GST system as it is implemented is a big paperwork merry-go-round. It’d be nice if business to business transactions could simply waive GST and be done with it, but that system would be wide open for exploiting, and when some company buys something they may not end up recouping GST in the end at all, so waiving the GST on the first transaction may not be the correct thing to do.

          • ghostwhowalksnz 3.1.1.2.1

            No No No.
            First its they arent paying GST now they get a refund . get your story right

            A GST Refund ? No way.
            A film is not like a shipment of bicycles made in NZ. The final product is a film negative, worth perhaps $5000 to produce, and even that is probably the old fashioned way and more likely just a hard disk worth $200. It s only once people see it in cinemas or rent DVDs that there is income .
            Many is the time a $200 mill production gets $20 mill at the box office .
            That is where the ‘income’ is made. And its scattered around the world and over time. Cant claim that back on NZ GST.

Links to post

Recent Comments

Recent Posts

  • Labour pays tribute to Peter Dunne
    Leader of the Opposition Jacinda Ardern has today paid tribute to United Future leader Peter Dunne, who announced he would no longer be standing in the 2017 General Election. “Today I acknowledge the significant contribution by Peter Dunne over 33 ...
    10 hours ago
  • Labour is the only party with a plan to fix teacher shortage
    Only Labour has a comprehensive plan to fix the critical shortage of teachers that is already hampering our schools and is set to get worse after nine years of inaction by the National Government, says Labour’s Education spokesperson Chris Hipkins. ...
    12 hours ago
  • Labour to invest in regional road rail
    Labour will invest in a rapid rail network connecting Auckland, Hamilton, and Tauranga, and double funding to help complete important regional roading projects, says Leader of the Opposition Jacinda Ardern.  “The ‘Golden Triangle’ of Auckland, Hamilton, and Tauranga contains half ...
    13 hours ago
  • Rattled Nats announce slapdash roads policy
      The Government rattled by the polls, has announced a poorly thought through slapdash policy for new Roads of National Significance, says Labour’s Transport spokesperson Michael Wood.  “There is a complete lack of any answers in National’s plan to build ...
    1 day ago
  • Let’s do this – Labour’s election campaign launched
    The Government I lead will be a government that listens, then acts. A Government that leads, not follows, says Labour Leader Jacinda Ardern at the launch of the Labour Party’s 2017 election campaign at a packed Auckland Town Hall. “I ...
    1 day ago
  • Government must apologise over rebuild debacle
    The Prime Minister owes the public of Otago and Southland an apology and then he must come up with an unredacted copy of the business case for the Dunedin hospital rebuild, says Labour’s Health spokesperson David Clark. "For too long the interests of ...
    4 days ago
  • Government caves to multi-national tax avoiders in the shadows
    News that the Government has secretly caved in to the demands of multi-national tax avoiders come as no surprise, but will disappoint Kiwi taxpayers, says Labour’s spokesman for Revenue Michael Wood.   “It has been revealed that a United States ...
    4 days ago
  • Cheaper to stay at The Langham than emergency housing motels
    Labour’s comprehensive plan to fix the housing crisis and ensure there’s enough state housing, means we won’t be paying through the nose for emergency accommodation like the current Government has to, says Labour’s Social Development spokesperson Carmel Sepuloni. “National has ...
    4 days ago
  • Government must come clean on water
      News that the National Government is secretly working behind closed doors on its own water charging schemes shows their utter hypocrisy on this issue, says Labour’s water spokesperson David Parker.  “They have been carping on about Labour’s plan for ...
    5 days ago
  • Government pays twice the price for emergency housing motels – with two more on the way
    Under Labour’s plan to build at least 1000 state houses each year, New Zealand wouldn’t be paying more than double the valuations for motels to house Kiwis needing emergency housing, says Labour’s Social Development spokesperson Carmel Sepuloni. “Under questioning today, ...
    5 days ago
  • HAM shows country needs Labour on housing
    The latest Housing Affordability Measure report shows affordability dramatically worsening for Auckland first home buyers, says Labour’s Housing spokesperson Phil Twyford. ...
    5 days ago
  • Canterbury kids get more support for mental health
    Children in Canterbury and Kaikoura will get dedicated mental health support to help them overcome the trauma of the earthquakes, says the Leader of the Opposition Jacinda Ardern. “We’ll fund an extra eighty mental health professionals for the next three ...
    6 days ago
  • Statement on Julie Bishop’s comments
    It is highly regrettable that the Australian Foreign Minister Julie Bishop has chosen to make false claims about the New Zealand Labour Party. I have been utterly transparent about this situation. I stand by my statements this morning that I ...
    6 days ago
  • Labour stands with Pike families
    A Labour Government will stand with the families of Pike River and reaffirm its commitment to safe workplaces by ensuring there will be a Minister responsible for Pike River, says Leader of the Opposition Jacinda Ardern. “The Pike River disaster ...
    6 days ago
  • Yes to Sallies – Labour will build more state houses
    The Salvation Army’s latest report ‘Taking Stock’ shows why New Zealand needs a Labour-led Government committed to a massive house building programme, says Labour’s Housing spokesperson Phil Twyford. “When the Sallies say the country needs 2000 extra state houses a ...
    6 days ago
  • New Zealanders deserve better than scaremongering over water
    New Zealanders need to hear from National about how they will fund the clean-up of our rivers and lakes for future generations. Instead, National has broadened its scare-mongering, says Labour’s Water spokesperson David Parker. ...
    1 week ago
  • School Leavers’ Toolkit to equip young people for adult life
    Labour will give school leavers the practical skills and knowledge they need for adult life with a new School Leavers’ Toolkit, says Leader of the Opposition Jacinda Ardern. “Our teachers and schools do a great job of teaching our children ...
    1 week ago
  • Pay equity to be a priority for Labour
      Labour will make sure that the country’s mental health workers are a priority when it comes to pay equity negotiations, says the Leader of the Opposition Jacinda Ardern.  “It is very important for me to right the wrong created ...
    1 week ago
  • Labour’s positive education plan
    Today’s announcement on learning support is more tinkering and proof that only a Labour Government will deliver the resources that schools and parents are crying out for, says Labour’s Education spokesperson Chris Hipkins.  “We have a positive vision for a ...
    1 week ago
  • Pike footage raises questions over government’s actions
    The Government’s seeming determination to turn a blind eye to new questions about what happened at Pike River Mine is troubling, says Labour’s West Coast-Tasman MP Damien O’Connor. ...
    2 weeks ago
  • Solution to rent rises lies in building houses and stopping speculators
    The spread of rental increases from the big cities to the surrounding regions shows why we need to get on top of the housing shortage build homes our families can afford, and lock out the speculators, says Labour’s Housing spokesperson ...
    2 weeks ago
  • Clean rivers don’t cost $18 a cabbage
    National is falling into a bad pattern of promising the world and not saying how they will fund it, says Labour’s Water spokesperson David Parker. ...
    2 weeks ago
  • Time for honest answer on transport funding
    National needs to explain how they will fund the $6 billion funding gap in their 10-year Auckland transport plan, says Labour’s Auckland Issues spokesperson Phil Twyford. ...
    2 weeks ago
  • Time for true numbers on overseas speculators
    It’s time for the Government to give accurate figures on the number of houses being bought by overseas speculators, says Labour’s Land Information spokesperson Raymond Huo. ...
    2 weeks ago
  • Fair and sustainable trade: A Green Party vision for New Zealand’s trading relationships
    Trade is a cornerstone of the New Zealand economy. It provides us with the things we want and need, and enables us to pay for those with exports that generate business opportunities and jobs. However, it should be recognised that ...
    GreensBy Barry Coates
    2 weeks ago
  • Clean rivers for future generations
    Labour will lead a nationwide effort to restore our rivers and lakes to a clean, swimmable state, says Leader of the Opposition Jacinda Ardern. ...
    2 weeks ago
  • New Zealand really can do better on health
    Labour’s commitment to affordable access to high quality healthcare will provide a better service for New Zealanders than the current Health Minister, who will not apologise for statements that he made that wrongly criticised hard-working staff in the Southern DHB’s ...
    2 weeks ago
  • Labour’s plan the answer to motorway chaos
    Labour’s plan to build a light rail network and improve heavy rail and bus services across Auckland is the only answer to the kind of motorway congestion Aucklanders endured this morning, says Labour Transport spokesperson Phil Twyford. ...
    2 weeks ago
  • Labour to build rail to Auckland Airport
    A world class city needs a rail connection from the CBD to its international airport – that’s why Labour will build light rail to Auckland Airport as a priority, says Leader of the Opposition Jacinda Ardern.  “Let’s get Auckland moving ...
    2 weeks ago
  • Is pay equity just too hard for this Govt?
    You are hard pressed these days to find someone that openly admits their misogyny, that men should still be paid more than women. Politicians proclaim that they want to see women paid more, but do their actions back it up? ...
    GreensBy Jan Logie
    2 weeks ago
  • Labour’s commitment to our Rainbow nation
    The Labour Party has reaffirmed its commitment to New Zealand’s rainbow community with its 2017 Rainbow policy, featuring the goal to end HIV in New Zealand by 2025. Grant Robertson says Labour continues a long and proud tradition of advocating ...
    2 weeks ago
  • Labour’s vision for Auckland more than reheated roads
    Labour is more ambitious for Auckland than the reheated set of transport projects proposed by National, says Labour’s Auckland Issues spokesperson Phil Twyford. ...
    3 weeks ago
  • Waiting urology patients are the tip of the iceberg
    The 10 patients waiting for urology surgery at Dunedin Hospital are just the tip of the iceberg, says Labour’s Health spokesperson David Clark.  "Hundreds of patients are waiting for follow-up appointments, but they are not deemed serious enough to be ...
    3 weeks ago
  • Maori Landowners Misled by Maori Party
    Māori landowners are being misled by Government hui being held throughout the country promoting the troubled Māori Land Service (MLS), which underpins the Crown’s unpopular Ture Whenua reforms, says Labour’s Ikaroa-Rāwhiti MP Meka Whaitiri. ...
    3 weeks ago
  • Government’s Johnny-come-lately approach to multinational tax won’t wash
    It’s a case of baby steps for a Government that still allows multinational companies to avoid paying their fair share of tax, says Labour’s Revenue spokesperson Michael Wood. “After nine years in government, five years after the issue of multinational ...
    3 weeks ago
  • Auckland congestion up there with the world’s worst
    Traffic congestion is costing Auckland up to $2 billion in lost productivity according to the latest report from the New Zealand Institute of Economic Research, says Labour’s Transport spokesperson Michael Wood.  “This is a disaster and underlines the need for ...
    3 weeks ago
  • Experience in Youth Parliament 2016
    Being a Member of Youth Parliament was an unexpected, but fabulous opportunity for me. It provided me a way to connect with other young people who have some things in common, and to learn what it is like to be ...
    GreensBy NZ Green Party
    3 weeks ago
  • Labour backs renters’ call for warm, healthy homes
    80 per cent of renters wish their home was warmer and drier, and that’s what Labour will deliver, says Labour’s Housing spokesperson Phil Twyford. ...
    3 weeks ago
  • We can – and must – do better for Kiwi jobs
    Labour has the plan to get more young New Zealanders into jobs and tackle concerns raised in the latest statistics which show an extra 3000 young Kiwis are neither earning or learning compared to the same time last year, says ...
    3 weeks ago

%d bloggers like this: